City raises alert over monorail risks

Now that the Seattle Monorail Project is back before the City Council for approval, several council members said yesterday that they want to be sure the financially troubled monorail agency can guarantee that taxpayers will be protected against lawsuits as promised.

That and several other issues -- in addition to the $11 billion price tag for construction and debt service -- could loom as obstacles to city approval next month.

"One of the most important things for the city is to have legal protections," Councilman Richard Conlin said.

"These are the kinds of requirements we demand of every transit project, of every agency working in the city.

"If we don't have them, that means the city's assets are at risk, because we're the deep pockets if something goes wrong."

The council must give the OK to the monorail agency's financial plan for building the 14-mile West Seattle-to-Crown Hill line before it can use the city's streets and rights of way.

Without council approval, the monorail can't be built.

In addition to the lawsuit protection, city officials are asking about the monorail agency's ability to remove a partly built system if it doesn't have enough money to build the whole line.

Also reportedly at issue is whether the monorail agency can maintain a $150 million liability insurance policy.

All three of those requirements were included in the transit way agreement under which the city would allow the monorail to use its streets and rights of way.

Council members Richard McIver and Jean Godden said the City Attorney's Office and city staffers are examining whether the monorail has complied with or can comply with the requirements.

Neither City Attorney Tom Carr nor the director of the civil department was in the office yesterday.

The monorail wants City Council approval of the project by mid-August, saying any delay will push back the current opening date of Dec. 1, 2010.

Natasha Jones, a spokeswoman for the Seattle Monorail Project, said yesterday she knew nothing about the issues and that the monorail's legal director had gone home for the day.

"If it's a major sticking point or issue, I'm sure we would have heard about it before now," she said.

City Council members were most concerned that the city be protected against lawsuits.

"We need to have assurances we're indemnified," Godden said.

McIver said: "I'm concerned about being able to be indemnified, being able to be held harmless from liability and also knowing for sure that if something happens, the monorail, whether it's built or not finished, can be torn down and removed from our streets at their expense. Those are my first concerns."

Other council members could not be reached yesterday, but there were indications that the monorail is emerging as a political issue.

Two candidates running against McIver issued news releases on the monorail yesterday.

One of them, businessman Robert Rosencrantz, called for a rebid of the project.

"I don't believe the public needs to accept an unaffordable monorail, nor does it need to kill the project," Rosencrantz said.

"The financing of the current proposal is akin to going to a payday lender," he said. "Issuing high-risk junk bonds is just more evidence that Wall Street thinks the financing of this proposal is too great a risk for its investors, let alone the citizens of Seattle."

Rosencrantz said he thought having a competitive bidding process could produce "a better outcome."

The monorail had only one bidder, Cascadia Monorail Co., a consortium of about 30 companies that would design, build, operate and maintain the project.

A second team, Team Monorail, dropped out of the competition last year but now says it wants another chance to bid.

King County Councilman Dwight Pelz, chairman of the council's transportation committee and a candidate against McIver, called the monorail's current proposal "unacceptable." He cited one $47 million borrowing item on which the monorail would owe $768 million in interest.

"They must put forth an affordable plan or go back to the voters for approval to shorten the line or ask for additional revenues," Pelz said.

Meanwhile, state Sen. Ken Jacobsen, D-Seattle and a critic of the monorail project, said he was seeking a special session of the Legislature to address the monorail.

"I think there's enough concern," he said. "I think this has statewide impact." [Note: Jacobsen's title has been corrected since this article was originally published]

If Seattle is too strapped with the expense of the monorail, Jacobsen said, efforts to ask voters for money to finance other transportation projects such as the Alaskan Way Viaduct may fail, leaving unfunded needs in the Legislature's hands.

Jacobsen would like to see a bill requiring any bond sales for the monorail be approved by the State Finance Committee.

Before that committee could act, the state auditor would have to issue a report on the bonds. The State Finance Committee is made up of the governor, the lieutenant governor and the state treasurer.

But Jacobsen acknowledged the Legislature was unlikely to agree to a special session for fear of what other issues might be brought up.

"There's extreme reluctance, but it is a critical situation," he said.

Jacobsen also has asked the state's Transportation Performance Audit Board to audit the monorail.

Doug Hurley, chairman of that panel, said yesterday that the board will discuss at a meeting tomorrow what its role should be.

He noted that state Auditor Brian Sonntag and a City Council financial consultant already plan financial audits. [Note: The spelling of Sonntag's name has been corrected since this article was originally published]

"We'd need to sort our way through and see whether there is a unique and constructive role for yet another agency to play," Hurley said.

Hurley also said that under legislation passed earlier this year, the composition of the board changes Friday, and he would be hesitant for the prior board to assign something to the new board.

State Secretary of Transportation Doug MacDonald, who, beginning Friday, will report to Gov. Christine Gregoire rather than to the state Transportation Commission, was cautious in his comments yesterday.

"The question of the monorail and what it will deliver as a transportation benefit and how it will be constructed and paid for are questions that are going to have to be decided in Seattle," he said.

But MacDonald added, "All transportation projects should be sound, so worrying about how the financing will work for operations into the future is surely something citizens need good answers to, and we hope they get them."

P-I reporter Jane Hadley can be reached at 206-448-8362 or janehadley@seattlepi.com

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